In fact, confidence in the housing market hit a record high in the latest weekly Bloomberg-Nanos index — even as respondents turned negative on their own personal finances.

The survey found 48.5 per cent of Canadians expect house prices to rise in the next six months, the highest level recorded in the survey since 2008. Fewer than 11 per cent expect to see house prices decrease.

Mid adult Hispanic couple raises their arms and cheer because they have bought their first home. They are holding a “sold” sign. They are standing in front of their red brick two-story home. The woman is dressed in business casual attire and the man is wearing a blue sweater.

“Bullish sentiment on real estate in Canada continues to drive consumer confidence,” pollster Nik Nanos said in a statement.

“Household expectations have improved by roughly 10 per cent since the start of the year as the effects of the oil price shock have stabilized and the focus has moved toward rising property values,” Bloomberg economist Robert Lawrie said.

High debt levels are precisely why many market observers are growing concerned about Canada’s priciest housing markets, namely the Toronto and Vancouver regions.

House prices in Toronto jumped 33 per cent in March from a year earlier, to an average of $916,567. While Vancouver’s house prices have moderated over the past six months, they remain elevated, with the benchmark price at $919,300 in March.

National Bank of Canada, which co-publishes the Teranet house price index, warned recently that “irrational exuberance” may be setting into some Canadian housing markets, noting that more than half of Canada’s regional markets are seeing price growth above 10 per cent annually.

With mortgages ballooning, Canadian household debt has repeatedly hit record highs in recent years, and now stands at $1.67 of debt for every dollar of disposable income.

Many in the real estate industry say it will do little to cool Toronto’s housing market, as foreign speculators are believed to have played a relatively small role in Toronto’s market.

The Bloomberg-Nanos survey found the mood surrounding personal finance has soured this year. The average score for 2017 so far has been 16.97, below the long-run average of 18.28. It was 18.04 in the latest survey.

This means that some 18 per cent of Canadians see their financial situation as improving. More than 28 per cent said their finances are worsening, while some 52 per cent said they see no change.

The first day of spring was two weeks ago, but winter is far from over in Newfoundland.

A powerful storm swept across the province this week, and another 75 centimetres of snow is expected by Tuesday evening. Over 97 centimetres was dumped on Gander over the weekend. To put that number in context, Toronto saw 81 centimetres of snow over the entire winter, according to The Weather Network.

This is Pamela Vincent’s son trying to find the back door of their home in Gander! Thanks for sharing, Pamela! #snowmageddon2017#NLwx

TORONTO — The cost of Toronto area real estate soared again in March, with the average price jumping 33.2 per cent from the same month last year and nearly five per cent from February.

The Toronto Real Estate Board reported Wednesday that the average price in the area rose to $916,567 last month, up from $688,011 in March 2016 and up 4.6 per cent from $875,983 in February 2017.

The average price of a condo passed the half-million-dollar mark, jumping 33.1 per cent, to $518,879. The average price of a single-family home in the city of Toronto rose 32.8 per cent, to $1.56 million, while rising 34.3 per cent in the suburban 905 region, to $1.24 million.

TREB said that demand for housing in Canada’s most populated area continues to exceed supply, one of the underlying causes of the huge price increases.

The Scotia report comes as another bank — TD Canada Trust — forecast house prices in Toronto will rise by another 20 to 25 per cent this year, similar to last year’s breakneck pace.

But the TD report was quick to note that the forecast “is not a vote of confidence” in Toronto’s housing market.

“Historically, it’s difficult to find a period across U.S. and Canadian markets where sustained home price growth of this magnitude was not followed by a period of contraction,” economists Beata Caranci, Diana Petramala and Katherine Judge wrote.

“The longer this market runs hot, the greater the risks to the Ontario economy.”— TD Economics

This report, too, suggested that a foreign-buyers tax would not have the desired effect, because house-flippers may be behind the relentless demand.

“Evidence is building that speculative forces are growing deeper roots” in the market, the report said.

Toronto’s house prices rose at a rapid pace again in February, with data from the Toronto Real Estate Board showing condo prices up 18.2 per cent in a year, to $515,424. The average price of a detached home soared 29.8 per cent, to $1.57 million.

In the longer term, the Scotiabank report calls on governments to change development rules to allow more homes to be built.

“This could include, for example, zoning amendments, increased density allowances in established neighbourhoods, a streamlined development approval process, and incentives to encourage more rental unit construction,” the report said.

The TD bank report noted that rising house prices are forcing new homebuyers to take on larger mortgages. Nearly half of Toronto’s insured borrowers now have a debt that is more than 450 per cent of their income, a cutoff line for extreme indebtedness.

“The longer this market runs hot, the greater the risks to the Ontario economy,” the TD report warned.

For yet another month, I am thrilled to be among the top producers for Royal Lepage Coast Capital Realty for the month of February, 2017 for the Greater Victoria (CRD) region on British Columbia’s stunning Vancouver Island. If you are looking for a hard working, client focused realtor to help you buy or sell your home, please call me at 250-812-4209

Toronto’s runaway house prices could threaten the city’s economy if even the wealthiest one per cent of earners find themselves priced out of the market, as is now happening, the Bank of Montreal’s economics branch is warning.

BMO chief economist Douglas Porter crunched the numbers and found that someone earning $225,000 a year — right at the cutoff line for being in the one per cent — would not be able to afford to buy an average-priced single-family home in Toronto.

That’s despite the fact this earner would be considered rich under tax rules. Anyone in Ontario earning above $220,000 pays a combined top marginal tax rate of 53.53 per cent.

Taking into account the “stress test” for mortgages that the federal Liberals instituted last year, Porter estimated that a couple earning $225,000 with $100,000 for a down payment would be able to afford a house of $987,289. The average price of a single-family home sold in Toronto in February was $1.57 million.

“It will be incredibly tough to attract talented folks … if they will struggle to buy a home and yet still pay taxes of over 50 per cent,” Porter wrote.

Surely, [$987,289] will be enough to afford a reasonable place? That depends on your definition of reasonable. Lo and behold, the average detached home price in Toronto (the 416 region) is now a cool $1.57 million, putting it well out of reach for the Dorights.

Okay, they decide a longer commute wouldn’t be such a bad thing, for now, so they look into the surrounding regions (the 905 belt) for a detached home. Turns out, the average price there is $1.11 million. Strike two. Okay, a semi-detached in Toronto would be acceptable, as long as the biker gang in the next-door unit is mostly quiet. Turns out, the average price is $1.08 million. Strike three.

So of course, the question becomes, who’s buying houses at $1.57 million? Some have pointed the finger at foreign cash buyers, others at cash-rich speculators.

But the single largest contributor may be move-up buyers — those who’ve seen the value of their home soar in recent years, and need to take a mortgage for a relatively small portion of a new home’s value.

A “Sold over asking” sign is on display on a house for sale in Toronto’s housing market in Toronto, Ontario, Canada, October 21, 2016. REUTERS/Hyungwon Kang

Toronto’s housing market is “mainly being driven by move-up buyers leveraging the equity in their existing homes,” David Madani, senior Canada economist at Capital Economics, wrote last month.

“Since these move-up home buyers obviously already live in a home and are largely responsible for the big increases in house prices, it stands to reason that there isn’t a major shortage of housing causing housing prices to escalate,” he added.

“Investors are the other reason for rising house prices. There are always shortages of housing for people wanting to buy their third, fourth or tenth property!”

Originally posted: http://www.huffingtonpost.ca/2017/03/17/toronto-one-percenters-priced-out-of-housing_n_15427692.html

Bang for your buck varies significantly, as the location, size, home finishes and condition of a $1 million home range widely by region

TORONTO, March 6, 2017 – According to Royal LePage, Canada’s leading real estate services provider, extreme variances in recent home price appreciation across Canada have contributed to vast differences in the types of properties a prospective homeowner can expect to buy with a $1 million budget. While the once-exclusive $1 million home has become the norm in certain markets, in others, it can purchase anything from an ultra-luxury abode to an entry-level residence.

A $1 million home’s location, size, proximity to amenities and current condition ranked as the top four factors that influenced its pricing, not unlike homes in other price ranges. However, together, these four characteristics varied considerably from region to region, with Canada’s two hottest markets – Toronto and Vancouver – offering smaller, more dated two-storey “starter” homes when compared to larger, luxurious mansions elsewhere. While the average number of bedrooms and bathrooms typically found in a $1 million dollar home did not differ by region as materially as the aforementioned four factors, there were noticeable differences between certain regions. In January, 2017, a $1 million home in the City of Vancouver had an average of 2.6 bedrooms and 2.1 bathrooms, while on Canada’s other coast, a $1 million home in Halifax had an average of 3.1 bedrooms and 3.8 bathrooms. Looking to Central Canada, $1 million secured an average of 3.4 bedrooms and 2.5 bathrooms in the City of Toronto, while purchasing a $1 million home in Winnipeg delivered the biggest bang for your buck, with an average of 4.1 bedrooms and 4.0 bathrooms.

In fact, of the seven cities studied across Canada – including Vancouver, Calgary, Saskatoon, Winnipeg, Toronto, Montreal and Halifax – Winnipeg provided the most living space overall, with $1 million fetching on average, a 3,505 sq. ft. luxury home in a desirable neighbourhood. During the same period, $1 million in Saskatoon secured the largest lot size of all regions, with an average of 65,838 sq. ft. In contrast, Vancouver offered prospective homebuyers the least amount of home for $1 million, with an average of 1,229 sq. ft. on a 3,134 sq. ft. lot.

“There are striking differences in the options available for those who are looking to purchase a $1 million two-storey home in Canada,” said Dianne Usher, senior vice president of Johnston and Daniel, a division of Royal LePage. “From an older starter home in Vancouver to a waterfront property with all of the bells and whistles in Halifax, the amount of value and space that prospective buyers receive is largely dependent on the characteristics of the market in which they are located.”

When looking at inventory levels and sales activity, $1 million properties and transactions have been more prevalent in highly sought-after markets where greater demand has pushed home values higher. As a result, this has led these regions to experience a weakening in the overall value received for $1 million when compared to other areas across the nation that are less constrained by supply and demand.

While smaller, regional markets have continued to maintain their value over the last decade, 10 years ago prospective homeowners in Canada’s largest metropolitan areas were able to purchase fully-renovated homes in desirable neighbourhoods with considerably more space for $1 million.

“What used to be considered a luxury price point is now the status quo in Canada’s two hottest markets,” added Usher. “Once carrying significant purchasing power, $1 million is now either below or on par with the price of an average two-storey home in Toronto and Greater Vancouver. Now, instead of a fully upgraded three bedroom, three bathroom two-storey property in prestigious neighbourhoods like Rosedale or West Vancouver, you’re getting a much smaller two or three bedroom, two bathroom property in need of renovation in a less sought-after location.”

“However, significant value can still be found in the suburbs or city-centres like Saskatoon and Montreal, where homes are more affordable, landing you substantially more home with better features as a result.”

The profile of a $1 million buyer was also found to vary by region, with developers and first-time buyers dominating the $1 million two-storey property segment in Canada’s largest metropolitan areas, while wealthy young to middle-aged professional couples with children acted as the predominant purchasers elsewhere.

City Summaries and Trends

Greater Vancouver

In January 2017, purchasers with $1 million in Greater Vancouver typically looked outside of the core for relative value to regions like Burnaby, Coquitlam and Richmond. The average $1 million home sold within this period in Greater Vancouver had 3.7 bedrooms, 3.2 bathrooms, 2,166 sq. ft. of living area and a lot size of 8,149 sq. ft., offering significantly more space and better features, when compared to properties in Vancouver proper.

“A prospective homeowner’s dollar goes significantly further in the regions surrounding the City of Vancouver,” said Adil Dinani, Realtor, Royal LePage West Real Estate Services. “Currently, most two-storey properties tend to sell for substantially more than $1 million in Vancouver, with the few properties available being significantly smaller or in dire need of renovation.”

Recently, many young move-up buyers have begun to dominate the $1 million two-storey market, as prices for condominiums and townhomes edged closer to the market segment, minimizing the amount of additional capital required to purchase this property type. Developers and speculators have also begun to hold off on purchasing two-storey property for $1 million as a result of bruised consumer confidence stemming from government intervention and weakened market characteristics.

Calgary

As a result of its recent economic downturn, purchasers looking for $1 million two-storey properties in Calgary currently realize approximately the same value they did 10 years ago. In January 2017, the average property selling for $1 million had 3.3 bedrooms, 2.8 bathrooms, 2,477 sq. ft. of living area and a lot size of 7,004 sq. ft.

The majority of buyers at this price point were 30 to 40-year olds who have come to the region to work within the oil industry. While the downturn in the energy sector has stifled sales activity and inventory at $1 million price point for the better part of two years, many buyers and sellers have recently begun to return to the market, causing homes to sell at a much faster pace.

“For most of 2016, Calgary’s million-dollar market segment continued to dwindle on the back of low oil prices, as many homeowners remained on the sidelines in hopes of better times ahead,” said John Hripko, Realtor, Royal LePage Benchmark. “However, just before the start of 2017, buyers finally realized that prices were unlikely to drop any further, leading many back into the market. As a result, we expect some upward pressure on prices and a shift in value over the horizon.”

Saskatoon

In Saskatoon, where homes are relatively affordable, $1 million two-storey properties tend to offer purchasers a large amount of space close to the core with a great view and high quality amenities. In January 2017, the average $1 million two-storey home had 3.2 bedrooms, 2.7 bathrooms, 2,829 sq. ft. of living area and a lot size of 65,838 sq. ft.

Million-dollar properties within the region were nearly unheard of a decade ago, as it was only when home prices virtually doubled in 2007 that inventory began to breach the seven-figure threshold. While inventory and sales activity at this price point still remain relatively low, Saskatchewan’s growing economy over the last decade has enticed many professionals, entrepreneurs and executives from the resource sector into the area, driving this niche market segment.

“Compared to many major Canadian cities, homes in the region’s $1 million price-point segment are quite affordable for affluent buyers who often earn incomes comparable to their counterparts elsewhere,” said Norm Fisher, broker/owner, Royal LePage Vidorra. “This small portion of the market signifies the pinnacle of luxury, with million-dollar budgets typically netting purchasers a state-of-the-art home in an affluent neighbourhood that either backs onto a river or golf course.”

Winnipeg

Boasting the most beds, baths and living area available for $1 million, a seven-figure budget goes a long way in Winnipeg when looking to the two-storey market segment. In January 2017, the average $1 million two-storey home had 4.1 bedrooms, 4.0 bathrooms, 3,505 sq. ft. of living area and a lot size of 13,453 sq. ft.

“Buyers with million-dollar budgets in Winnipeg are able to live like kings,” said Michael Froese, managing partner, Royal LePage Prime Real Estate. “Whether it’s an older colonial-type estate or modern mansion, the region’s extreme affordability relative to elsewhere provides purchasers with this budget access to a true luxury home.”

As with other parts of the Prairies, high-quality listings generally fall well below the million-dollar mark within Winnipeg, making the $1 million property a very rare sight. A decade ago, this market segment was extremely inactive, with roughly seven two-storey homes trading hands before 2007.

Greater Toronto Area

Across the Greater Toronto Area, prospective purchasers are still very much able to find relative value for $1 million, especially outside of the downtown core in regions like Ajax, Pickering, Milton, Mississauga and Brampton. In January 2017, the average $1 million two-storey home had 3.8 bedrooms, 2.9 bathrooms, 2,363 sq. ft. of living area and a lot size of 8,168 sq. ft.

Unlike Vancouver, homebuyers in the City of Toronto are still able to find some inventory around the $1 million mark, with the region offering a number of two-storey starter homes in up-and-coming neighbourhoods to prospective purchasers. This, however, is in stark contrast to what buyers could have received ten years ago, where home searches in the $1 million price range often produced larger, fully-upgraded homes in prominent areas like Rosedale, Leaside and Lawrence Park.

“Current market conditions have made it increasingly difficult to find value for $1-million in central Toronto,” said Cailey Heaps Estrin, broker, Royal LePage Real Estate Services Heaps Estrin Team. “Buyers will always receive more value the further they venture outside of Toronto’s core. However, the high-priced competitive environment that we have grown accustomed to in central Toronto is now expanding into neighbouring communities, leading buyers to look even further for relative value, while decreasing the overall home purchasing power of $1-million across the GTA.”

Greater Montreal Area

Despite witnessing a healthy amount of price growth within the last decade, the Greater Montreal Area has still managed to hold its position as one the most affordable major city centres in Canada, offering purchasers with a $1 million budget a substantial amount of home for their money. In January 2017, the average $1 million two-storey home within the region had 4.1 bedrooms, 2.8 bathrooms, 2,758 sq. ft. of living area and a lot size of 13,040 sq. ft.

Since 2007, moderate inventory shortages have placed an upward pressure on prices within the region, pushing many high-quality listings around the million-dollar mark. With demand remaining fairly constant, current market conditions have created a slight seller’s market, where properly listed million-dollar properties are quickly sold.

“Purchasers with $1 million budgets in the Greater Montreal Area have a great deal of buying power,” said Marie-Yvonne Paint, real estate professional, Royal LePage Heritage. “Unlike other major metropolitan areas, properties in Montreal and the Greater Montreal Area are far more reasonably priced and offer significantly more space than what you’d typically be accustomed to in a world-class region. Of course, there is still a good amount of competition when trying to purchase this type of property in the region, as well-priced homes in this price range will typically attract many buyers.”

Halifax

People armed with a million dollars in search of a waterfront mansion need not look any further than Halifax. With enough million-dollar inventory to satisfy demand, prospective buyers within the region are able to purchase a number of unique types of properties reflective of their tastes and desired lifestyle. In January 2017, the average $1 million two-storey home within the region had 3.1 bedrooms, 3.8 bathrooms, 3,316 sq. ft. of living area and a lot size of 43,521 sq. ft.

While homes tend to be much larger on the fringes of the city and offer prospective homeowners direct access to the water, buyers with seven-figure budgets can also tap into the heart of downtown to find stunning heritage homes. As with the rest of Atlantic Canada, properties in Halifax have maintained their affordability relative to other regions across the nation, landing purchasers just as much, if not more, property than what was previously available a decade ago.

“The value of a million-dollar property in Halifax continues to grow, both when compared to other cities across Canada and when compared to 10 years ago,” said Sandra Pike, team lead, Royal LePage Atlantic. “Recently, the region’s urban sprawl has enticed developers to expand into untapped regions of Halifax, giving prospective purchasers the option of buying brand new, fully upgraded homes with a substantial amount of space for $1 million.”

Methodology

The tables found within this report represent averaged characteristics for two-storey properties that sold between $950,000 and $1,050,000 in 2007, 2016 and January 2017. Highlighted property listings were collected based on a uniform set of criteria[4], where listings in each region required a standard two-storey that is selling or has been sold in the last two months within 10 per cent of $1 million. To gain additional insight into regional market dynamics and property characteristics, interviews were conducted with Royal LePage real estate professionals in the featured cities.

Canada’s banking industry association has criticized a federal Liberal proposal that would see them take on more of the risk involved in lending out mortgages.

The Canadian Bankers Association (CBA) said in a submission to the Department of Finance that the proposal would “undermine” access to mortgages for Canadians, by increasing mortgage rates, reducing competition and excluding some people from getting mortgages at all.

The proposal would see mortgage lenders pay a deductible on their insurance when a mortgage defaults. Currently, mortgage insurance covers the full cost of a defaulted mortgage.

That arrangement has some critics worried about “moral hazard”: Since someone else pays when things go wrong, the banks have little incentive to make sure that their insured mortgages have been lent out responsibly.

Many organizations, including the IMF, have suggested that the government phase out or privatize the Canada Mortgage and Housing Corp., the country’s government-run mortgage insurer, in order to reduce risk in the housing market.

Finance Minister Bill Morneau’s department is weighing a proposal to make banks pay a deductible on their insurance when a mortgage defaults. (Phot” Reuters/Chris Helgren)

But the CBA’s report argues, in essence, that if it ain’t broke, don’t fix it.

“Canada’s housing finance system has demonstrated considerable resilience and stability over time,” the report said, referring to the fact that Canada avoided the U.S.’s housing crash last decade.

“The historical success of Canada’s system creates a strong presumption in favour of existing arrangements.”

The report argues that forcing the banks to take on more of the risk of insured mortgages would make it riskier for lenders, which means they would demand higher mortgage rates.

Additionally, it would mean some regional and smaller lenders, who depend more on insured mortgages, would stop lending, reducing competition.

“The impact would be particularly acute for first-time homebuyers,” the report stated.

Canadians now have the highest household debt burden among the major G7 economies, largely due to growth in mortgage lending. (Chart: Parliamentary Budget Office)

Though Canada’s banks have been lauded in recent years for being well-run and well-capitalized, many organizations have less positive things to say about Canadians’ household debt, which has been driven by rising mortgages and is now the highest in the G7, at 166 per cent of disposable income.

Canadians are leaving Canada’s three largest cities much faster than they are moving to them — an unexpected fact buried in StatsCan’s data on internal migration.

Toronto, Montreal and Vancouver all ranked among just five major Canadian cities that saw a loss of locals to other cities between 2011 and 2014, the latest year for which data is available.

In that time, Toronto saw the largest outflow of people, both as a percentage of the population and in total numbers.

“It’s a bit surprising to see Toronto as a large net loser to internal migration, although a glance at its housing market probably goes a long way to explaining it,” wrote Laval University economics professor Stephen Gordon, in a blog post.

Vancouver (left), Toronto and Montreal (right) have seen the largest outflows of locals among Canadian cities. (Composite photo: Getty Images)

That’s not to say these cities are losing population; they aren’t, thanks to immigration from abroad. But the data shows locals are leaving these cities primarily for less expensive nearby communities.

The vast majority of Torontonians who left the city went to nearby cities such as Hamilton, Oshawa and Kitchener-Waterloo.

That squares up with data showing house prices jumping in the areas surrounding Toronto, as city residents move further out in search of affordable housing.

This was partly true for Vancouver as well, with rural and small-town B.C. the largest target for those leaving the city. But Vancouverites more often move to other major cities. Toronto was the top destination outside B.C.

The four-decade-long trend of Montrealers moving to Toronto continues. Toronto was the single largest destination for Montrealers leaving the city, although many more moved to rural and small-town Quebec, suggesting that rising prices (and maybe retirement plans) are a part of this trend too.

This doesn’t necessarily mean homebuyers will get paid for holding a mortgage, as there are additional fees homebuyers have to pay lenders. But some Danish borrowers did get paid to take mortgages last year, in the wake of Brexit, which caused interest rates to dip.

Negative rates make Denmark richer — and more unequal

Denmark has had a negative benchmark deposit rate for nearly five years, the longest of the handful of countries where rates are negative. The rate currently sits at minus-0.65 per cent.

On the surface, it has made the Danes much richer. Residents have seen an “impressive increase in real wages,” Tore Stramer, chief economist at Nykredit, told The Independent in January.

That came after news that bank deposits in Denmark are at their highest level in the 16 years the data has been tracked, indicating Danes have more wealth than ever.

But there is a downside to negative rates, and one some economists say could impact many countries — though especially ones with negative rates, such as Denmark, Japan, Sweden and Switzerland. And that is rising inequality.

When interest rates are super-low, it tends to drive up asset prices, making those who already own those assets wealthier. Think of houses: Low mortgage rates make larger mortgages affordable, pushing up house prices. That benefits existing homeowners, but causes future homebuyers to become more indebted.

A recent study from Denmark’s Economic Council found inequality had risen noticeably in the country since 1990. It noted that, since 2008, when interest rates started coming down, income from capital (such as rental housing and investments) rose relative to income from wages — a clear sign the wealthy are particularly benefiting from low rates.

A soaring housing market

Some observers worry the Danish could be hit especially hard if and when interest rates begin to rise.

Property prices have soared since interest rates went negative, growing 40 to 60 per cent in Copenhagen in the first three years of the country’s negative rate policy.

“To be concrete, there is a danger that Danes go blind to the risk of rates ever rising again,” Stramer told Bloomberg last year. “That raises the risk of a major housing price decline, when rates at some point or other start to rise again.”

So while Danes may be enjoying free mortgages today, they may end up paying for them in the future, in the form of lower house prices.